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LAWS(BOM)-2024-3-68

HIGH COURT OF BOMBAY

Coram : B.P.Colabawalla, Somasekhar Sundaresan JJ.

Decided On : March 28, 2024

Appeal Type : Writ Petition No. 13593 of 2016

Appellant(s) :

Ramky Infrastructure Ltd

Respondent(s) :

STATE OF MAHARASHTRA

Advocate(s) :

UDAY WARUNJIKAR, A.I.PATEL, Tanaya Goswami, Jagdish Aradwad, RAJESH

BINDRA, BHARTI SHARMA

Equivalent Citation :

LAWS(BOM)-2024-3-68

Referred Judgement(s) :
- Promoters And Builders Association Of Pune Vs. State Of Maharashtra, [2015 12 SCC 736]
[Referred To]
Referred Act(s) :
- Maharashtra Land Revenue Code, 1966, S.48(7), S.247
- Mines Act, 1952, S.2(1)(J)
- Mines And Minerals (Development And Regulation) Act, 1957
Headnote:
A. MAHARASHTRA LAND REVENUE CODE, 1966 - S.48(7) - Government title to mines and
minerals, S.247, MINES ACT, 1952 - S.2(1)(J) - Definitions, MINES AND MINERALS
(DEVELOPMENT AND REGULATION) ACT, 1957 - - and dump the excess soil in a
location designated by the TMC;(c) In 2011, one Mr. Vishal Madhukar Jadhav (Respondent
No.6) filed an application under the Right to Information Act, 2005 seeking information
about the earth excavated by the Petitioner and thereafter made complaints about alleged
violation of the provisions of the MLRC on account of nonpayment of royalty for excavation
of "minor minerals" (allegedly the earth removed for purposes of laying the sewerage
pipeline);(d) Eventually, on 13/10/2011, the Circle Officer of Thane issued a notice to the
Petitioner stating that approximately 21,222 brass[1] of earth was excavated without
authority, and consequently asked the Petitioner to show cause as to why proceedings under

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Sec. - Government title to mines and minerals :(7) Any person who without lawful authority
extracts, removes, collects, replaces, picks up or disposes of any mineral from working or
derelict mines, quarries, old dumps, fields, bandhas (whether on the plea of repairing or
constructions of bund of the fields or an any other plea), nallas, creeks, river-beds, or such
other places wherever situate, the right to which vests in, and has not been assigned by the
State Government, shall, without prejudice to any other mode of action that may be taken
against him, be liable, on the order in writing of the Collector, or any revenue officer not
below the rank of Tahsildar authorised by the Collector in this behalf to pay penalty on of an
amount upto five times the market value of the minerals so extracted, removed, collected,
replaced, picked up or disposed of, as the case may be: [Emphasis Supplied] 7.
B. Perusal of the amended Rules leave no doubt in our mind that the case of the Petitioners falls
strictly within the second proviso which contemplate a situation where the earth extracted
while developing a plot of land is utilized on the very same plot for carrying out an activity of
levelling the land or any work in the process of development of such plot. - 48(7) must
necessarily deal with the evidence of usage, and return findings of fact on the purpose for
which the excavation was made and the end-use to which the excavated earth was put, in
order to conclude whether the excavated earth is a "minor mineral", and therefore, if penalty
can be imposed, and whether royalty is payable.
C. 48(7) must necessarily deal with the evidence of usage, and return findings of fact on the
purpose for which the excavation was made and the end-use to which the excavated earth was
put, in order to conclude whether the excavated earth is a "minor mineral", and therefore, if
penalty can be imposed, and whether royalty is payable.
D. Rule is made absolute in the aforesaid terms and the Writ Petition is disposed in terms
thereof. - All concerned will act on production by fax or email of a digitally signed copy of
this order.

Judgment :

SOMASEKHAR SUNDARESAN,J.

(1.) Rule. With the consent of the parties, rule is made returnable forthwith and the writ petition is
taken up for final disposal.

(2.) This writ petition challenges the imposition of penalty and charge of royalty by revenue officials
of the State of Maharashtra, under Sec. 48(7) of the Maharashtra Land Revenue Code, 1966
("MLRC"), in connection with the alleged unauthorized excavation of earth during implementing a
sewerage pipeline network in Thane. For the reasons set out in this judgment, we have no hesitation in
allowing the writ petition.

Factual Matrix:

(3.) A brief overview of the facts relevant for the effective disposal of these proceedings is

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summarized below:

(a) Petitioner No.1 is a company and Petitioner No.2 is a shareholder of Petitioner No.1.
For the sake of convenience, they are hereinafter referred to as the "Petitioner". The State of
Maharashtra is Respondent No.1. The Collector, the Tahsildar, and the Circle Officer; are Respondent
Nos.2 to 4 respectively. The Thane Municipal Corporation ( "TMC") is Respondent No.5. After filing
of the above Petition, one Mr. Vishal Madhukar Jadhav was joined as Respondent No.6 pursuant to an
amendment directed by this Court vide its order dtd. 3/5/2017.

(b) The Petitioner was the successful bidder in a tender floated by the TMC to implement
an underground sewerage pipeline network in Thane. A contract for laying pipelines was awarded to
the Petitioner in February 2009. Under this contract, the Petitioner was required to dig and excavate
the earth; store the excavated earth in a designated spot; lay reinforced concrete pipes for carrying the
sewerage; thereafter refill the land with the excavated earth; and dump the excess soil in a location
designated by the TMC;

(c) In 2011, one Mr. Vishal Madhukar Jadhav (Respondent No.6) filed an application under
the Right to Information Act, 2005 seeking information about the earth excavated by the Petitioner and
thereafter made complaints about alleged violation of the provisions of the MLRC on account of
nonpayment of royalty for excavation of "minor minerals" (allegedly the earth removed for purposes
of laying the sewerage pipeline);

(d) Eventually, on 13/10/2011, the Circle Officer of Thane issued a notice to the Petitioner
stating that approximately 21,222 brass[1] of earth was excavated without authority, and consequently
asked the Petitioner to show cause as to why proceedings under Sec. 48(7) of the MLRC must not be
initiated ("SCN");

(e) On 17/10/2011, the Petitioner wrote to the revenue officials asserting that it was merely
implementing a public works project, and that the excavated earth was being used for refilling the
trenches. The letter also stated that the estimation of the earth excavated appeared to be erroneous.

(f) Despite this letter of the Petitioner, on 29/11/2011, the Tahsildar, Thane, passed an order
stating that a penalty of Rs.1.47 Crores and royalty of Rs.49.18 Lakhs (aggregating to Rs.1.96 Crores),
would be payable by the Petitioner in respect of the earth excavated;

(g) On 2/3/2013, Respondent No.3 issued a notice demanding that the royalty amount
claimed must be paid within seven days. This led to Writ Petition No. 5775 of 2013 being filed before
this Court impugning imposition of penalty and charge of royalty. Vide order dtd. 28/1/2014, the said
writ petition was disposed of granting liberty to avail of the statutory remedies under the MLRC,
keeping all contentions on merits open;

(h) Thereafter, the Sub-divisional Officer, Thane passed an order dtd. 3/11/2014 dismissing
the Appeal under Sec. 247 of the MLRC. On 30/7/2015, the Second Appeal of the Petitioner also came
to be rejected. Further round of an unsuccessful Appeal followed. It is in these circumstances, the

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present writ petition was filed assailing the original order dtd. 29/11/2011 passed under Sec. 48(7) of
the MLRC, which had imposed penalty and charged royalty, and Appeals against which under the
MLRC have consistently failed.

[1] A "brass " is a unit of measure for volume of mineral excavated - essentially, 100 cubic
feet constitutes 1 "brass".

(4.) This writ petition was originally filed on 18/11/2016 and was amended twice - first, pursuant to
an order dtd. 3/5/2017 directing that Mr.Vishal Madhukar Jadhav be added as Respondent No.6; and
second, pursuant to an order dtd. 6/3/2023 (with a further extension of a week granted by order dtd.
10/4/2023) permitting the Petitioner to add new grounds and bring other contemporaneous judgments
on record. By this time, the Honble Supreme Court had rendered a comprehensive judgment in
Promoters and Builders Association of Pune vs. State of Maharashtra, 2015 (12) SCC 736 ("Promoters
and Builders"). So also, another Division Bench of this Court had disposed of Writ Petition No. 1429
of 2020 and Writ Petition No. 1430 of 2020 vide a judgment dtd. 13/2/2020 in respect of other
contractors involved in the very same sewerage network project in Thane. These judgments were
brought on record and submissions based on them were included in the amended grounds.

(5.) As mentioned earlier, the public works project in question commenced way back in 2009. The
SCN under the MLRC issued to the Petitioner was on 13/10/2011 and the impugned order was passed
on 29/11/2011. Though the Petitioner has made extensive pleadings on interpretation of the law, a very
clear crystallization of the law took place during the pendency of this writ petition, and which
inexorably leads us to hold that the penalty imposed, and royalty charged by the State is untenable.
Therefore, we are not delving into whether it is the TMC (as the principal) or the Petitioner (as the
contractor-agent) who had the responsibility, if any, under the MLRC to pay royalty for the excavated
earth.

(6.) At the threshold, it would be instructive to notice the provisions of Sec. 48(7) of the MLRC,
extracted below: S. 48. Government title to mines and minerals :

(7) Any person who without lawful authority extracts, removes, collects, replaces, picks up
or disposes of any mineral from working or derelict mines, quarries, old dumps, fields, bandhas
(whether on the plea of repairing or constructions of bund of the fields or an any other plea), nallas,
creeks, river-beds, or such other places wherever situate, the right to which vests in, and has not been
assigned by the State Government, shall, without prejudice to any other mode of action that may be
taken against him, be liable, on the order in writing of the Collector, or any revenue officer not below
the rank of Tahsildar authorised by the Collector in this behalf to pay penalty on of an amount upto
five times the market value of the minerals so extracted, removed, collected, replaced, picked up or
disposed of, as the case may be: [Emphasis Supplied]

(7.) The judgment of the Honble Supreme Court in Promoters and Builders (rendered on 3/12/2014)
squarely dealt with how to interpret Sec. 48(7) of the MLRC in connection with excavation of earth.
The judgement dealt with not only an Appeal filed by builders and developers in Pune, but also dealt

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with an Appeal filed by Nuclear Power Corporation ("NPC") which had been visited with penalty and
a demand of royalty by the State. It is NPCs case that is relevant for our purposes since it resembles
the position of the Petitioner before us. NPC had excavated earth in the course of repair and widening
of a water intake channel connected to a nuclear power station. NPC contended that there was no
commercial exploitation of the earth excavated by it. The excavation was incidental to the repair and
widening of the water channel, which was in consonance with the land granted by the State on a
freehold basis to set up an atomic power station. The Honble Supreme Court noticed and upheld NPCs
contention with the following findings:

"14. Though Sec. 2(1)(j) of the Mines Act, 1952 which defines "mine" and the expression
"mining operations" appearing in Sec. 3(d) of the 1957 Act may contemplate a somewhat elaborate
process of extraction of a mineral, in view of the Notification dtd. 3/2/2000, insofar as ordinary earth
is concerned, a simple process of excavation may also amount to a mining operation in any given
situation. However, as seen, the operation of the said notification has an inbuilt restriction. It is
ordinary earth used only for the purposes enumerated therein, namely, filling or levelling purposes in
construction of embankments, roads, railways and buildings which alone is a minor mineral.
Excavation of ordinary earth for uses not contemplated in the aforesaid notification, therefore, would
not amount to a mining activity so as to attract the wrath of the provisions of either the Code or the
1957 Act.

15. As use can only follow extraction or excavation it is the purpose of the excavation that
has to be seen. The liability under Sec. 48(7) for excavation of ordinary earth would, therefore, truly
depend on a determination of the use/purpose for which the excavated earth had been put to. An
excavation undertaken to lay the foundation of a building would not, ordinarily, carry the intention to
use the excavated earth for the purpose of filling up or levelling. A blanket determination of liability
merely because ordinary earth was dug up, therefore, would not be justified; what would be required is
a more precise determination of the end use of the excavated earth; a finding on the correctness of the
stand of the builders that the extracted earth was not used commercially but was redeployed in the
building operations. If the determination was to return a finding in favour of the claim made by the
builders, obviously, the Notification dtd. 3/2/2000 would have no application; the excavated earth
would not be a specie of minor mineral under Sec. 3(e) of the 1957 Act read with the Notification dtd.
3/2/2000.

16. Insofar as the appeal filed by Nuclear Power Corporation is concerned, the purpose of
excavation, ex facie, being relatable to the purpose of the grant of the land to the Corporation by the
State Government, the extraction of ordinary earth was clearly not for the purposes spelt out by the
said Notification dtd. 3/2/2000. The process undertaken by the Corporation is to further the objects of
the grant in the course of which the excavation of earth is but coincidental. In this regard we must
notice with approval the following views expressed by the Bombay High Court, in Rashtriya
Chemicals and Fertilizers Ltd. v. State of Maharashtra while dealing with a somewhat similar
question: (1992 SCC OnLine Bom para 14)

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"14. If it were a mere question of the Mines and Minerals Act, 1957 covering the removal of earth,
there cannot be possibly any doubt whatever, now, in view of the very wide definition of the term
contained in the enactment itself, and as interpreted by the authoritative pronouncements of the
Supreme Court. As noted earlier, the question involved in the present case is not to be determined with
reference to the Central enactment but with reference to the clauses in the grant and the provisions in
the Code. When it is noted that the Company was given the land for the purpose of erecting massive
structures as needed in setting up a chemical factory of the designs and dimensions of the company,
the context would certainly rule out a reservation for the State Government of the earth that is found in
the land. That will very much defeat the purpose of the grant itself. Every use of the sod, or piercing of
the land with a pickaxe, would in that eventuality, require sanction of the authorities. The
interpretation so placed, would frustrate the intention of the grant and lead to patently absurd results.
To equate the earth removed in the process of digging a foundation, or otherwise, as a mineral product,
in that context, would be a murder of an alien but lovely language. The reading of the entire grant,
would certainly rule out a proposition equating every pebble or particle of soil in the granted land as
partaking the character of a mineral product. In the light of the above conclusion, I am clearly of the
view that the orders of the authorities, are vitiated by errors of law apparent on the face of the record.
They are liable to be quashed. I do so." [Emphasis Supplied]

(8.) More recently, this very Bench had the occasion to consider and apply the law declared in
Promoters and Builders in the case of AIGP Developers (Pune) Private Limited vs. The State of
Maharashtra, 2024 SCC OnLine Bom 726 ("AIGP Developers"). In AIGP Developers, this Bench, by
applying the law laid down by the Honble Supreme Court in Promoter and Builders, stipulated that it
was necessary to examine the end-use to which the excavated earth is applied, in order to determine
whether such excavated earth could even be regarded as a "minor mineral" so as to attract the
provisions of Sec. 48(7) of the MLRC. A blanket determination of liability merely because earth was
dug up would not be justified. In order to invoke Sec. 48(7), the State would need to make a "more
precise determination of the end use". For the sake of convenience, the relevant portion of the decision
in AIGP Developers is extracted below:-

"26. It will be seen that the penalty under Sec. 48(7) is linked to the market value of the
mineral involved. The inference we would draw from the articulation in Promoters and Builders by the
Hon'ble Supreme Court is that commercial exploitation in the market (as distinguished from use for
oneself) would be an important factor in determining whether the excavated earth would at all
constitute "minor mineral.". This is why Promoters and Builders has placed emphasis on the need for
the State to find out whether the excavated earth was re-deployed or was used commercially.

27. As seen above, the State Government is empowered to make rules under Sec. 15 of the
Mining Act. Using this power, the Extraction Rules have been made. After the ruling in Promoters and
Builders, the State Government, explicitly amended Rule 46 of the Extraction Rules, which provides
for royalty on minor minerals removedfrom the leased area. With effect from 11/5/2015, Rule 46 was
amended to explicitly make a conscious distinction between minor minerals extracted and used on the

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same land and minor minerals extracted and removed from that land. The amended Rule 46(i) of the
Extraction Rules provides as follows:-

"(i) The lessee shall pay royalty on minor minerals removed from the leased area at the
rates specified in Schedule I:

Provided that, such rates shall be revised once in every three years:

Provided further that, no royalty shall be required to be paid on earth which is extracted
while developing a plot of land and utilized on the very same plot for land levelling or any work in the
process of development of such plot;

28. A plain reading of the foregoing provision would show that where earth is extracted in
the course of development of a plot of land and is utilised on the very same plot of land for levelling or
for any other work in the course of such development, no royalty is required to be paid,. Since
Promoters and Builders made it clear that re-deployment on the very same land (as opposed to
commercial use after its removal from the said land) is the key jurisdictional fact to determine if the
"wrath of Sec. 48(7)" would be attracted, the amended Rule 46(i) of the Extraction Rules has also done
away with royalty being payable on the extracted earth, if it is re- deployed in the development of the
same plot of land, for land levelling or any other work incidental to the process of developing the same
plot of land. Therefore, where the excavated earth is removed from the plot of land, royalty would be
payable but where the excavated earth is re- deployed on the very same plot of land, there would be no
charge of royalty. If there was no charge of royalty, the extraction being incidental to levelling that
very land or any work relating to the development of that very plot of land would naturally not require
any separate permission. As stated by the Learned Single Judge of this Court in the judgment in
Rashtriya Chemicals and Fertilizers Ltd. V. State of Maharashtra (supra), which is extracted and
endorsed by the Hon'ble Supreme Court in Promoters and Builders, any other view would point to the
need to get government approval for every piercing of the land with a pick-axe and equate every
pebble or particle of soil as partaking the character of a minor mineral." [Emphasis Supplied]

(9.) The order impugned in this writ petition was passed in 2011. The declaration of the law in
Promoters and Builders was on 3/12/2014. The consequential amendment to mining law was effected
on 11/5/2015. However, Promoters and Builders declared the law on how Sec. 48(7) of the MLRC
should have always been interpreted. Such interpretation would squarely cover the facts at hand.
Therefore, the judgement of the Honble Supreme Court would indeed be the basis on which the
actions impugned in this writ petition ought to be quashed. Besides, as far as public works projects
were concerned, the law declared in Promoters and Builders was precisely the position of the State
Government since 2011, as will be seen from the analysis of TMCs affidavit later in this judgement.

(10.) It is evident that the penalty under Sec. 48(7) is linked to the market value of the mineral
involved. The evident inference from the articulation in Promoters and Builders is that commercial
exploitation of the excavated earth in the market (as distinguished from use for oneself) would be an
important factor in determining whether the excavated earth would at all constitute a "minor mineral".

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This is why Promoters and Builders has placed emphasis on the need for the State to find out whether
the excavated earth was re-deployed or was used commercially.

(11.) The case of the Petitioner in the instant case closely resembles the stance of NPC noticed in
Promoters and Builders. NPC dug the earth to repair and widen a water channel whereas the Petitioner
dug the earth to lay a portion of sewerage pipeline network in Thane. The need for digging up the
earth in order to lay the pipeline and to use the very same excavated earth to refill the very same land
after laying the pipeline was also set out in the tender document, based on which the Petitioner acted
as a contractor for the sewerage network project. The Petitioner was meant to dispose of the excess
soil at a designated spot instructed by the TMC. There is no evidence of the Petitioner having put the
excavated earth to commercial use.

(12.) It is noteworthy that in Promoters and Builders, the Honble Supreme Court cited with approval,
a judgment of a learned single judge of this High Court in the case of Rashtriya Chemicals and
Fertilizers Ltd. v. State of Maharashtra, 1992 SCC OnLine 248 ("Rashtriya Chemicals") while dealing
with a similar situation in the context of Sec. 48(7) of the MLRC. The extracted portion of the
judgement is contained in the extraction from Promoters and Builders, above.

(13.) In a nutshell, the learned Single Judge had stated that when land was given to Rashtriya
Chemicals and Fertilizers to set up a chemical factory, the purpose of the grant of land subsumed the
purpose for which the land was dug. Therefore, the reservation of the mineral on land that statutorily
vests in the State under Sec. 48 of the MLRC was ruled out by the very grant of the land. The learned
Single Judge ruled that any contrary construction would defeat the very purpose for which the land
was provided. If the States stance was to be accepted, said the learned Single Judge, "every use of the
sod, or piercing of the land with a pick-axe, would, in that eventuality, require sanction of the
authorities." The learned Single Judge ruled that the grant of the land for setting up the factory would
rule out equating every pebble and particle of soil in such land as partaking the character of a mineral
product. This ruling was fully endorsed by the Honble Supreme Court in Promoters and Builders.

TMCs Affidavit:

(14.) We must also note that the Petitioner was merely a contractor carrying out a sewerage network
project commissioned by the TMC. In that sense, the Petitioner was an agent of the TMC. The TMC
has filed an affidavit dtd. 2/3/2019 in these proceedings confirming the position adopted by the
Petitioner. Paragraphs 5 to 7 of the TMCs affidavit warrant reproduction and are set out below:

"5. I say that thereafter the Petitioner started the work as per the work order issued by the
answering Respondent and it seems that on the basis of the complaint made by the newly added
Respondent No.6 the office of the Tahsildar issued notice dtd. 29/11/2011 to the present Petitioner
contending that while doing the work as per the work order issued by the answering Respondent, the
Petitioner has excavated 24593 brass of earth and therefore the Tahsildar imposed fine/royalty of
Rs.1,96,74,400.00 on the present Petitioner. I say that in fact the Govt. of Maharashtra has issued G.R
dtd. 7/1/2011, as per which no royalty shall be required to be paid on earth which is extracted while

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doing the public work while developing the plot. Hereto annexed and marked as EXHIBIT-A is a copy
of the said G.R. dtd. 7/1/2011.

6. I say that the Govt. of Maharashtra framed rules, called Maharashtra Miner Mineral
Extraction (Development and Regulation) (Amendment) Rules, 2015 vide notification dtd. 11/5/2015,
as per which also, no royalty is required to be paid on earth, which is extracted while developing the
plot of land and utilized on the very same plot for land leveling or any work in process of development
of such plot. Hereto annexed and marked as EXHIBIT-B is a copy of said Notification dtd. 11/5/2015
issued by the Govt. of Maharashtra.

7. I say that even the office of the answering Respondent by letter dtd. 23/7/2015 has
requested the Collector, Thane that no royalty should be imposed on the Petitioner and other
contractors, to whom the public work has been assigned by the TMC on earth extracted while
developing the plot of land as per the work order issued by the TMC as they are doing the public work
and after completion of the work the contractor is using the very same extracted earth for land leveling
or any work in the process of development of such plot. Hereto annexed and marked as EXHIBIT-C is
a copy of said letter of the TMC dtd. 23/7/2015 to the Collector/Thane. [Emphasis Supplied]

(15.) It is evident from the record, that on 7/1/2011, the State Government had passed a Government
Resolution explicitly providing for a 100% waiver of royalty payment in respect of excavation of earth
involved in public projects in course of development. This was half a decade before the eventual
amendment to the mining law to provide for the same position. We note that even in excavation
relating to such public developmental projects, the Government Resolution provided that any
commercial exploitation by deploying the earth on some other plot or by way of sale of such excavated
earth for a commercial return, would lead to royalty being payable under the MLRC. The Government
Resolution also explicitly resolved that any excavations after 1/11/2006 and any proceedings in
connection with public works initiated prior to said date would not be persisted with. The actions of
the revenue officials of the State in the present case are in conflict with the Government Resolution,
which the TMC and the Petitioner were entitled to rely on, in planning their affairs and operations.

(16.) There is not a whisper in the show cause notice or in the order imposing penalty and charging
royalty, about any such commercial exploitation of the excavated earth by the Petitioner. In fact, the
States stance proceeds simply on the footing that the earth having been dug up, royalty must follow.
Therefore, the stance of the State is directly in conflict with the States own Government Resolution
dtd. 7/1/2011, the learned Single Judges view expressed in Rashtriya Chemicals, and indeed in conflict
with the law declared in Promoters and Builders.

Other Contractors cases:

(17.) While the law has been explicitly declared by the Honble Supreme Court, it is vital to note that a
Division Bench of this Court has quashed identical actions against two other contractors who were
involved in the same sewerage project commissioned by the TMC. Disposing of Writ Petitions filed
by M/s. Atharva Construction Vs. State of Maharashtra, Through Urban Development Department

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Secretary and Anr. (W.P. 1429 of2020) and Shapoorji Pallonji and Co.- KIPL (JV) Vs. State of
Maharashtra, Through Urban Development Department Secretary and Ors. (W.P. 1430 of 2020), in a
judgment dtd. 13/2/2020 (2020 SCC OnLine Bom 3864.), a Division Bench of this Court took note of
Promoters and Builders and the consequential amendment to the Maharashtra Minor Mineral
Extraction (Development and Regulation) Rules, 2013 to quash the penalties and royalty imposed on
those Petitioners. The analysis by a Division Bench in disposing of these two Writ Petitions is
extracted below:

"11. Perusal of the amended Rules leave no doubt in our mind that the case of the
Petitioners falls strictly within the second proviso which contemplate a situation where the earth
extracted while developing a plot of land is utilized on the very same plot for carrying out an activity
of levelling the land or any work in the process of development of such plot. In such situation, the
Rules contemplate that no royalty is liable to be paid. The Petitioners' specific case as set out is that
the material excavated while digging the land for carrying out an underground sewerage in the first
case and in the second case for the construction of Sewerage Treatment Plants and Sewerage Pumping
Stations involved excavation of material which was consumed by back-filling the same on the same
plot. The Certificate placed on record also confirms the said statement and reflect that the balance
quantity was transported on the plot of the Thane Municipal Corporation. Thus, the Petitioners have
not used the said material by monitising the same or gainfully exploiting it. The material has been used
for filling or levelling while development activity was undertaken and this, in our considered opinion
by applying the law laid down by the Apex Court in the case of Promoters and Builders Association of
Pune (supra), would not amount to a mining activity so as to attract the provisions of the Maharashtra
Land Revenue Code and surely not the penalty leviable under the same. [Emphasis Supplied]

(18.) The Division Bench also ruled that if in any given case, the State Government is able to discern
the exact quantity of excavated earth that has been commercially exploited while implementing the
project, it would be at liberty to issue a fresh notice based on such discerned facts and initiate
proceedings in accordance with the law. The same observation and direction would also hold good in
the instant case. It would be necessary for the State to establish empirically, that the earth excavated
has also been put to commercial use in order to validly initiate proceedings under Sec. 48(7) of the
MLRC. We reiterate this to make it clear that we are not issuing a blanket declaration of the law that
there can never arise any proceedings for payment of royalty in connection with earth excavated in the
course of implementing public projects, despite the excavated earth being commercially exploited, if
that were the case. The Government Resolution of 7/1/2011 in fact grants a full exemption from
royalty for earth excavated in the course of developmental projects, with a caveat that if such earth
were to be commercially exploited in the market, then royalty would be payable. In the instant case,
the contractor was bound to dump the excess soil after refilling the earth upon installation of the
sewerage pipes, in such part of the land as designated by the TMC. The TMC has confirmed that there
has arisen no violation of the law and there is no scope for imposition of any royalty.

(19.) The onus of demonstrating any commercial exploitation of the earth would naturally have to be

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on the party alleging such exploitation. In the instant case, the approach of the State has been summary
in nature, and in direct conflict with not just the case law, but also with the TMC, which commissioned
the public work project. The facts asserted by the TMC point to no commercial exploitation of the
excavated earth. At the least, to sustain proceedings in such circumstances, the revenue authorities
must bring to bear a prima facie iteration of facts that establish that the TMC is wrong in its reading of
the facts.

Directions and Declarations:

(20.) In these circumstances, we have no hesitation in allowing the writ petition by quashing and
setting aside the penalty imposed and the royalty charged to the Petitioner in connection with its
implementation of the sewerage network project of the TMC. We, therefore, issue the following
directions:

(a) The penalty imposed and the royalty charged to the Petitioner under the impugned order
dtd. 29/11/2011, which was based on the show cause notice dtd. 13/10/2011, are both hereby quashed
and set aside;

(b) Earth excavated to implement public works projects that entails re-filling the same plot
of land in the course of the development work would not entail payment of royalty under the MLRC,
by reason of the Government Resolution dtd. 7/1/2011. In any case, this is the position obtaining from
Promoters and Builders as well as Rashtriya Chemicals. However, if there is any evidence of
commercial exploitation of any part of such excavated earth, whether by way of sale in the market or
sale for building and construction on some other land, such component of excavated earth would
constitute a "minor mineral" and the provisions of the MLRC would apply accordingly; and

(c) The onus of bringing home a charge of commercial usage of excavated earth in order to
charge royalty would be on the revenue officials alleging such usage. A prima facie case to show
commercial use of excavated earth in the course of implementing public work projects would need to
be brought to bear by the authorities alleging such commercial use of excavated earth. Orders
disposing of show cause notices issued under Sec. 48(7) must necessarily deal with the evidence of
usage, and return findings of fact on the purpose for which the excavation was made and the end-use
to which the excavated earth was put, in order to conclude whether the excavated earth is a "minor
mineral", and therefore, if penalty can be imposed, and whether royalty is payable.

(21.) Rule is made absolute in the aforesaid terms and the Writ Petition is disposed in terms thereof.
However, there shall be no order as to costs.

(22.) This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All
concerned will act on production by fax or email of a digitally signed copy of this order.

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